REGULATION AND ENFORCEMENT OF BLOCKCHAIN, CRYPTOCURRENCIES AND ICOS

R&C: How would you summarise the issues raised by blockchain, cryptocurrency and ICO markets? Why is oversight of these areas so difficult?

Kaufmann: In a word, disruption. The decentralised ledger technology underlying blockchain, cryptocurrency and ICOs is a decentralisation of value, analogous to the internet decentralising information. We can do things that were not previously possible, such as securely and instantly transfer value across the world or ascribe value to intangible strings of data and exchange them. And we can apply the new technology to old processes as well as brand new opportunities. Existing laws, rules and regulations which assume traditional methods, technologies and jurisdictions are being tested to and beyond their limits. We are therefore facing trying to shoehorn the new reality in to our existing regimes or to build new regimes to accommodate this brave new world. While we do this, we all have to get to grips with both the technological innovations and the use cases being generated.

Yates: It is important to look at where the underlying technology originated: bitcoin. Bitcoin was created in 2008 as a reaction to the global financial crisis, the goal being to allow people to transfer value peer-to-peer without the involvement or oversight of banks and governments. Along with other cryptocurrencies, bitcoin relies on the infrastructure of the internet to function, and it is increasingly clear that the blockchain technology upon which it is based is a natural, and probably inevitable, stage in the evolution of the internet.